'Milestone' for troubled Aberdeen company
Plexus signs Russian deal to offset North Sea decline
Shares in the Aberdeen company fell 44% yesterday after it issued a profits warning on the back of a severe fall in activity following the oil price collapse. It warned that it would be cutting jobs and expenditure on capital operating activities.
Today it has unveiled a deal with Gusar and Konar which it describes as a “significant strategic milestone for Plexus” as it shifts its focus to other major global markets where it can partner with established local manufacturers and oil service providers.
Entry into the Russian Federation and other CIS states follows a similar agreement between Plexus and Yantai Jereh Oilfield Services Group, signed in July, which took it into the major Chinese, wider Asian, Brazilian, Indian and Middle Eastern oil and gas markets.
Under the Russian deal, which follows a Heads of Agreement entered into on 16 June, Gusar and Konar will use Plexus equipment under licence. It is worth an initial $5 million.
Plexus chief executive Ben Van Bilderbeek said the new venture forms part of the company’ strategy to extend its product line and services beyond its dominant North Sea market “which is currently severely impacted by the low oil price and consequent reduction in drilling activity, into new, larger growth markets around the world”.
Russia was the third largest producer of petroleum and other liquids in 2014 and holds almost a quarter of the world’s proven natural gas reserves and 5% of global crude reserves.
Mr Bilderbeek said: “With gas forming the lion’s share of the Russian energy sector, and our equipment being ideally suited to the high pressures and high temperatures associated with gas wells, we are excited to be entering this key market through our partnership with Konar and Gusar, two established and highly reputable local suppliers.
“Any hydrocarbon leaks at sea potentially have no international borders, hence using the safest available equipment is paramount for the safety of the environment not only locally but further afield. We look forward to commencing work with Gusar and Konar and establishing a sizeable business in Russia and the CIS.
“Operators around the world currently have to deal with the twin forces of increased regulation and oil price volatility, as well as the need to control and reduce drilling costs which is now more important than ever.
“Together with our recent agreements to enter the Chinese market and the securing of a local licence with Petronas in Malaysia, we are, despite current challenges and the collapse of the North Sea exploration activity, continuing to work on delivering our objective to build Plexus into a leading global supplier of oil and gas equipment.”
Gusar and Konar, Plexus’ licencing agreement partners, said “We are delighted to announce this exciting new venture with Plexus, which will see both of our oil and gas equipment manufacturing facilities supplying Plexus’ best in class POS-GRIP wellhead technology to be made in Russia.
“We believe Plexus’ products are ideally suited for the Russian market both in terms of its existing needs and, in the future, for Artic exploration where there are ecological considerations as well as unique technical challenges.
“We look forward to working with Plexus and are confident that this partnership will expand our service and product offering for our oil and gas customers.”